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Monzo outage: Is it possible to fail in a good way?

The digital challenger bank Monzo suffered an outage all day on Sunday.

With its current accounts launching later this year, this seems like poor timing, but some have suggested that Monzo failed in a good way. Is that even possible?

In some ways, Sunday’s events were almost a proof of concept for Monzo. Read any interview with CEO Tom Blomfield or any of the bank’s marketing and you’ll know that dealing with problems is something that traditional banks haven’t always done well, and that Monzo wants to get right.

Blomfield tells CNN that overseas fees, overdraft messaging and general communication when things go wrong are the issues that frustrate him most (and that Monzo set out to change).

To that end, Monzo includes a whole range of useful features including spending summaries and notifications when purchases are made. Monzo’s app UX has quickly garnered much praise, and the bank seems devoted to considering the experience for a wide range of users (see this article about ‘positive friction’ for customers with mental health issues).

The second @monzo current accounts become available I'm switching. App, customer support is light years ahead of current banks

When Monzo went down (along with several other challenger brands) after its third-party payment processor failed on Sunday morning, it was relatively speedy (three hours) and pretty comprehensive in its communication with customers.

As you can see from our editor David Moth’s screenshots below, there was an initial message informing customers of what had happened, reassuring them and advising they take alternative payment with them in the afternoon. This initial message directed users to Monzo’s status page, which includes a list of incidents and the live status of each service.

On Monday morning, there followed notification that normal service had resumed. This message included a link to a blog post explaining the reasons for the outage, which is striking in its tone and honesty (though completely in-keeping with the brand).

Oliver Beattie, head of engineering, writes that Monzo had been working for 12 months on connecting directly to Mastercard in-house, and thereby precluding the need for a third-party payment processor. This in-house solution will go live when Monzo launches its current account product.

So what have we learned?

1. Some of the difficulties inherent for startups

Monzo’s agile and modular approach meant using a third-party processor that it completely relied on. Monzo’s service was not built entirely for resilience (the cost of processing this in-house was too high), but this will change as its growing customer base and new products dictate that it should.

2. Monzo walked the walk

Monzo communicated well enough to please most of its customers, and also to publicise the work it has been doing on its current accounts to a fairly large audience. Monzo’s fans love the usability and approachability of the brand (just look at the Monzo Love Twitter account), and Monzo stayed true to this brand during crisis management.

3. The smartphone is the future of customer service in banking

Being able to message every one of its customers pretty quickly, Monzo helped to turn the story of the day into one of general interest (‘challenger bank goes down’) and not one of consumer outrage.

As high street branches become less important to new bank customers, apps and a bank’s CRM strategy are more and more important in diverting customers away from phone lines.

In summary

Whilst Monzo would probably rather the outage had never had happened, it showed grace under pressure. That said, there are caveats to consider.

It is obviously important to note that Monzo still has a relatively tiny customer base compared to the likes of Barclays and Natwest. Also, at the moment Monzo only offers customers a pre-paid bank card, so users must have another current account through which they manage their funds (e.g. for receiving their salary, paying direct debits, etc.).

This meant the startup could advise customers to simply use their other payment methods while it fixed the outage. It would have been a different story if Monzo had restricted access to customers’ main current accounts. And as RBS saw with its 2015 outage, the big problems come when hundreds of thousands of customers are failed for the second or third time.

A recent Accenture report found that one in three people would move their banking to Google, Amazon, or Facebook if those companies offered services.

This echoes JWT Intelligence’s prediction that Financial Technology (fintech) will become the primary reformer within retail banking, largely because new entrants offer a gateway into a world so encumbered by process and rigid operating hours that it can often appear inflexible to a generation that expects instant search results and deliveries within an hour.